New National Bank of Malta lawsuit seeks compensation for remaining shareholders

A new constitutional case has been filed concerning the 1973 takeover of the National Bank of Malta (NBM), aiming to secure compensation for two shareholders who were not involved in the massive lawsuits recently decided by the Constitutional Court.

The new application, filed in the First Hall of the Civil Court (Constitutional Seat), names Abraham Debattista and Teresa Debattista as complainants against the Prime Minister, the Minister of Finance, and the State Advocate. The applicants, represented in part by lawyers Josè Herrera and David Camilleri, are the heirs of siblings Euterpe and Maria Colombus, who held NBM shares.

This latest claim marks the start of proceedings for two former NBM shareholders who form part of the one-third of shareholders who did not participate in the recent, decades-long litigation. The compensation attributable to this remaining group is estimated at around €34 million in total, with the Debattista heirs’ portion, based on their shareholding, calculated at approximately €1,178,000, according to lawyer Josè Herrera.

The Debattista heirs are claiming compensation for their holding of 102 ordinary shares and 16 first preference shares, totaling 118 shares. 

The new lawsuit follows the landmark decision by the Constitutional Court, which recently awarded former shareholders approximately €72 million in compensation, concluding one of Malta’s longest-running financial disputes. That judgment found that the government’s 1973 intervention imposed an excessive and disproportionate burden on shareholders, violating their constitutional property rights.

The core of the issue centres on legislative moves taken between 1973 and 1974, when parliament passed two controversial acts that wrested control of the NBM and its subsidiaries out of the hands of its shareholders.

The process began on 12 December 1973 with Act XLV of 1973, which created a government-appointed Council of Administration to assume full control of both the NBM and Tagliaferro Bank. The council was empowered “in the broadest manner possible” to manage the banks’ affairs.

Months later, Act IX of 1974 further curtailed the shareholders’ powers. Article 31 stipulated that no decision by directors, shareholders, or general meetings could take effect unless approved, and later ratified by the Council of Administration. Although a subsequent legal notice declared the council’s temporary functions expired on 24 March 1974, by then, the claimants argue, the decisive blow had already been delivered.

The heirs state that in the months that followed, and after the government itself acquired shares from other holders, the council proceeded to transfer all assets and liabilities of the NBM to the newly created Bank of Valletta. 

Crucially, the applicants say the transfer was carried out “without any consideration,” without any payment to shareholders, and without requiring or obtaining their consent.

The heirs are asking the court to declare that their rights under Article 37 were and continue to be violated, and to award both economic and moral damages for the decades-long deprivation. They are also seeking a court order obliging the government to pay the liquidated compensation deemed due.